How has finance capital and the new finance capital elite changed in the 21st century? What is the growing impact of financial instability on the global economy today? This course will look at Marx’s Vol. 3 of Capital, Keynes’ General Theory, Hyman Minsky’s contributions in the 1980s-90s, and contemporary debates today on ‘financialization’ and its contribution to recent, and now re-emerging, global economic crises. The global economy is headed for yet another deeper economic crisis. Both mainstream economists and left analyses fail to fully understand what’s different in the 21st century global economy, and in particular the new structure of finance capital and the economic and political influence of today’s global finance capital elite. This course will explore what the best minds of the past have said about finance capital and ‘financialization’ in an open-minded, non-dogmatic analysis of selections of key works on the subject of finance capital by Marx, Keynes, Minsky and others, as well as from a selective consideration of debates today on the subject of finance capitalism. The course will then look at specific historical events of financial crashes in the global and USA economy, in the 1990s, the 2008-09 event, developments in China and Europe today, and the prospects of another financial crash in the USA in the next decade. Students will hopefully complete this course with a better understanding of the coming next financial crisis.

How has Finance Capital changed from the 19th to the 21st century? What is the role of financial instability historically in precipitating banking crashes and economic depressions? Why are most contemporary analyses of ‘financialization’–both left progressive, Marxist, and bourgeois economist–wrong? What are the prospects of another global financial crash in the next ten years, followed by a more serious economic depression ‘next time’? These are the main themes of this course. In the first four weeks, in order to answer these questions, this course will explore the views of the best economists on the subject of finance capital. In the second four weeks, the course will look at actual financial crashes and instability events since the early 1990s, as well as brewing today again, including in Japan, China, Europe, and USA.

Week 1 begins with a review of key chapters of Marx’s unpublished vol. 3 of Capital (read chapters 24,25,27,29; 30-31 recommended) on capitalist finance and credit in the mid-19th century. Also read Rasmus’s ‘Notes on Marx On Finance Capital’ posted here from the April-May session. For those interested in more in-depth optional reading on Marx related to the topic, read the posted ‘Bifurcation of Marxist Economic Analysis’ by Rasmus. Rasmus will add further commentary on Marx and Finance on July 1, selections from his forthcoming September 2015 book, ‘Systemic Fragility in the Global Economy’. A link to a free online source of Marx’s Vol. 3 chapters is: https://www.marxists.org/archive/marx/works/1894-c3/index.htm

Class 2: Keynes & Fisher: Finance Capital 1930s (July 8)

How had Finance Capital changed by the early 20th century? What was its role in precipitating the Great Depression of the 1930s? Who were the professional speculators and how had the escalation of debt in the 1920s and financial speculation led to the stock market crash of 1929, and thereafter to four consecutive banking crashes in the early 1930s?
Keynes’ key chapter 12 of his General Theory, on the role of professional financial speculators in capitalist economies will be read and discussed. As well, will Keynes’ contemporary, Irving Fisher, and his article on the role of debt and price deflation in depressions, ‘The Debt-Deflation Theory of Depressions’. These readings are posted below, with Rasmus’ commentaries from 2010. Also, additional commentary by Rasmus will be posted July 8 from Rasmus’ forthcoming September 2015 book, ‘Systemic Fragility in the Global Economy on Keynes and Fisher’s interpretations of financial crises.

Class 3: Minsky & Rasmus: Finance Capital, 1970-2000 (July 15)

The progressive return of financial instability in the global capitalist system in the 1970s and after will be the topic, as well as the views of the chronicler of this return, economist Hyman Minsky. How the rise of finance capital from the ashes of the great depression and post-1945 period occurred, and what were the consequences in the 1970s, 1980s, and early 1990s when Minsky wrote of it. Why Minsky believed financial instability was the intrinsic nature of Capitalism. What Minsky did not see coming.
Several of Minsky’s seminal articles, inclulding ‘The Financial Instability Hypothesis’, are posted here to read and discuss. Select chapters from Jack Rasmus’s 2010 book, ‘Epic Recession: Prelude to Global Depression’ are also available, as will selections on July 15 from Rasmus’s forthcoming, ‘Systemic Fragility in the Global Economy’, September 2015 new book.

Class 4: Shadow Banks & New Finance Capital Elites (July 22)

How Finance Capitalism, and the ranks of the global Finance Capital elite have evolved and changed in the last two decades is the topic of this fourth week’s class. What are shadow banks and how are they destabilizing global capitalism? what is the role of debt, leverage, securitization, derivatives, the global liquidity explosion, technology, neoliberal capitalist central bank policies, inside credit, fiscal austerity, competitive currency devaluations, deflation, declining real investment, labor market ‘reform’, and other important developments to understanding the evolution of 21st century Finance Capital? Why is the global capitalist system becoming more financially unstable?
Several readings are posted below on ‘what is shadow banking’, the scope and magnitude of global debt, and other relevant topics. Read the two commentaries on shadow banking posted by Jack Rasmus, and if time permits the additional two pdf files (one short; one long) on shadow banks. Jack will post selections on the subject of who are the new global finance capital elite from his forthcoming book, Systemic Fragility in the Global Economy, September 2015, on July 22.

Class 5: Financial Crises in the 1990s (July 29)

In weeks 5 through 8 of the course, attention turns to focus on actual financial crashes and their aftermath. Week 5 focuses on the growing frequency, scope and severity of financial instability in the 1990s. Japan’s great crash of 1990-91 and perpetual recession that followed; the USA savings and loan bust of 1990 and recession; Mexico’s ‘Tequila Crisis’; the Asian Meltdown of 1997-99; and the USA ‘dot.com’ bust of 2000.
Read the two commentaries by Rasmus on financial instability in the 1990s, especially in Asia, Japan, and US bubbles in housing, tech stocks, and forex, plus optional third party articles on the Asian Debt-Currency crisis of 1997-98 and after.

Class 6: The Global Financial Crash of 2008-09 (August 5)

Continuing the focus on actual financial crashes and consequences, week #6 investigates the causes and consequences of the great banking crash of 2008-09. The role of financial speculation and shadow banking in the crash, the failure of banking regulation that followed, and the failure of central bank QEs and government fiscal austerity policies to generate full recovery.
Read the select chapters from Jack Rasmus’ Epic Recession: Prelude to Global Depression (2010) and ‘Obama’s Economy: Recovery for the Few’, and other published articles, posted below, and other critical analyses of the 2008-09 crash and the recessions that followed, 2010-15.

Class 7: Financial Instability: China & Europe Today (August 12)

The growing role of shadow banks, financial asset bubbles, rising government-corporate debt, failure of central banks and government policies to check the rising financial instability and slowing economies in China and Europe are the topic of this 7th class. Growing instability in the BRICS and other emerging markets. Is a new phase of global financial instability emerging, with a focus on China and Europe? Based on the theories of writers thus far reviewed, and the prior experiences of financial crashes in both the remote and recent past, what does it all mean today?
See the posted articles from Rasmus on China and Europe in 2015, posted selections from his forthcoming September 2015 book, Systemic Fragility in the Global Economy, and references from the global business press and global capitalist financial institutions (BIS, IMF, McKinsey Research, etc.) on financial instability in China and Europe today.

Class 8: Financial Instability in the US Economy: 2015-20 (August 19)

In this final class, the focus turns to the USA economy in 2015. Is the US economy really ‘exceptional’? On a path to growth and stability, real and financial, while the rest of the world grows more financially unstable and slips into more recessions everywhere? This class examines the claim of American economic exceptionalism and debunks the argument. Sources of growing influence of shadow banks and the new finance capital elite are identified and discussed. Forces of financial instability growing behind the scenes are noted. Possible scenarios, near and future, of increased financial instability are proposed. Why the USA may be on the eve of another financial crises and even deeper downturn than that following 2008-09.

The class will discuss the USA scenarios, as well as the conditions in China, Europe, the growing crises in emerging markets, the global oil price collapse, in light of both the theoretic views of Marx, Keynes, Minsky, Rasmus and others, as well as the historical examples of financial crashes of the past two decades. The general topic of how has Finance Capital changed today? Is it a dominant force in the 21st century, and a fundamentally destabilizing fact that threatens the global capitalist economy itself?

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